Criminal Gangs Are Making Billions Selling Illegal Tobacco From Derelict Shops

The sniffer dog pawed eagerly at a length of skirting board behind the counter of a high street convenience store in Derbyshire, East Midlands. It was the kind of shop stocked with cheap, plastic tat and forlorn rows of long-life groceries arranged sparingly on dusty shelves.

Pulling out the wooden board from the floor, investigators heard noises from behind the wall. Moving aside a heater mounted on slide rails revealed a secret room, accessed by a hole in the wall.

Inside was a young man, holed up on a mattress with a large stash of a valuable, illicit commodity – cigarettes. 

The young man’s job was to push them out through the skirting board, tugging it back into place with a length of chain. Trading standards investigators would later learn that the man was being paid just £20 a day to take orders from the front counter via a microphone linked to a bluetooth speaker. 

The incident is one of an increasing number unearthed by trading standards investigators in the UK involving a new form of modern slavery, largely hidden from sight on Britain's austerity-hit high streets, where cut-price convenience stores are used as fronts for an illegal tobacco industry reliant on the exploitation of asylum seekers and illegal economic immigrants. 

Shunted around the country from shop to shop, living in squalid conditions and paid a pittance, although often willingly involved, they are part of a black market dominated by Kurdish gangs that is often dismissed as a victimless crime that only hurts the tax authorities.

Between 2019 and 2020, the UK’s tax authority HMRC estimated as much as a third of the 12,000 tonnes of rolling tobacco smoked in the UK was bought and sold illegally. Around 2.5 billion illegal cigarettes, 12 percent of the total market, were smoked. Overall, £2.3 billion in lost tax revenue went up in smoke. 

At £5 for a pack of 20 cigarettes or £8 for a 50g pouch of loose tobacco, illegal tobacco – which includes counterfeit products or brands smuggled without paying tax – can cost less than a third of the price of legitimate products. 

But while official figures show the underground market has been steadily shrinking since the 90s, those tackling it on the frontline reveal a very different picture. Trading standards teams say they are busting more illegal tobacco outfits – particularly those who use shops as fronts for selling in the most deprived parts of the UK – than ever before, with prosecutors powerless to stop them. 

Investigators have told VICE World News that the illicit tobacco trade in the UK has been cornered by Middle Eastern organised crime groups – with Kurdish gangs emerging as the main players over the last decade. Crime gangs are paying stooges to represent the legal face of stores by signing tenancy agreements. Retail decline, exacerbated by the pandemic, has paved the way for crime gangs to gain a foothold in struggling town centres. Meanwhile hapless foot soldiers, like in the illegal weed farm industry, take the fall when enforcement teams come knocking.

At another shop in Derbyshire in England’s East Midlands, VICE World News watched last September as a detection dog - Cooper, a Red Fox Labrador – discovered a sophisticated tobacco concealment hidden four feet deep beneath a tiled floor and operated electronically on hydraulic pistons. 

Cooper’s handler Stuart Phillips from sniffer dog firm B.W.Y. Canine says he’s seen at least 20 identical hides on jobs all over the UK.

The squalor in the cavernous space beyond the shop’s front counter – piles of rubbish and discarded building materials, leaking toilets, bare wires hanging from ceilings – was mirrored in the flat above, the scene of several fruitful tobacco enforcements in recent months. 

Beds were thin rectangles of foam with dirty, spartan bedclothes. Sheets of plasterboard covered the windows. Flaking, damp walls were shored up with sheets of plastic. In one bedroom, a monitor screened images from four CCTV cameras sited to give an early warning of an imminent raid. 

“Sometimes these foot soldiers – often illegal immigrants or asylum seekers who don’t have permission to work in the UK - are allowed to sleep on the premises as well, which can be regarded as a perk, depending on how you look at it,” Derbyshire trading standards investigator Ade Parkin explained. “You can see why we have concerns about slavery.”

In Northamptonshire, Police Licensing Sergeant Simon Moreton is targeting tobacco-related organised crime by using intelligence from trading standards teams to revoke shops’ alcohol licences.

“We encounter a lot of illegal workers,” explains Moreton, who has a background in modern slavery and labour exploitation in a former role with what was then called the UK Border Agency. “They're popping up one week in one shop, one week in another shop, coming from all over the country, and probably just getting punted around the network.

“We try our hardest to get them out of the way, talk to them independently and signpost them to the charities that can help, but personally I find it very frustrating because there’s a clear fear and reluctance to admit that they're in that situation.”

Further north, the experience of West Yorkshire trading standards officers echoes that in the Midlands. The team has been commended for its illicit tobacco work and its efforts to highlight modern slavery.

“When we do our inspections, we notice little things,” says tobacco lead Babul Hussain. “These guys behind the counter might not have a mobile phone, they might not have a house key, they might not have any money on them. Sometimes they won't even know where they live – they have to pull out a piece of paper with an address written on it. They're not dressed very well, they look like they’ve not had anything to eat, and they're working in really poor conditions.

“We speak to them about their journey to the UK and sometimes they’ve come in the back of a lorry, paying up to £20,000 to organised crime gangs. They owe that money to someone, and they're still paying it off.”

The government defines modern slavery as “the recruitment, movement, harbouring or receiving of children, women or men through the use of force, coercion, abuse of vulnerability, deception or other means for the purpose of exploitation.”

In theory, the government supports slavery victims through the National Referral Mechanism (NRM). NRM statistics show criminal exploitation rocketed by 42 percent during the pandemic lockdowns of 2020, with 10,613 potential slavery victims referred to the framework. But as adults must consent to being referred, the problem is massively under-reported. 

Maya Esslemont, director of anti-slavery NGO After Exploitation, says: “Non-UK [slavery] survivors have no incentive to work with the government, or with police forces, because they aren't even guaranteed minimal protections.”

And Hussain explains: “People don’t come forward into the NRM, they’re not reflected in the data, so [tobacco] is not seen as a problem area. Nobody we see says, ‘Yes, I am a victim. I need help.’ They don’t want to get involved with the authorities. They don’t want their £20,000 debt moving on to relatives left behind in the Middle East. If we go back to a shop, we very rarely see the same person again. They're moved on to another premises. One guy told us he’d been in 23 different shops in the last three years.”

Bristol-based Kurdish researcher Ali Zalme, who wrote a book, Home and Sense of Belonging Among Iraqi Kurds in the UK, thinks an innate sense of statelessness has instilled his culture with a deep-seated mistrust of authorities.

“Kurds always feel like guests – or like rebels –and so do not integrate into society or  cooperate with authority,” he says. “The fear of government authority is something deep inside us.”

Many of those working in bad conditions for extremely low pay selling tobacco do not see themselves as slaves, but willing participants taking up an opportunity to earn what they can. In reality, like selling illegal drugs, the industry has become a lifeline for some who arrive in the UK with no chance of legitimate work or who cannot survive on the £39.63 a week asylum seekers allowance. 

Phil Mykytiuk has spent a decade mapping tobacco crime gangs in the north of England. He is new in post as a trading standards manager at Bolton Council in Greater Manchester but worked for 10 years on a tobacco enforcement team at nearby Rochdale Council. He believes the UK’s mismanaged asylum system is providing a gateway for Kurdish gangs to funnel new, willing recruits into their criminal enterprises. 

“We’d find lads who should have been in asylum seeker accommodation in Liverpool or Birmingham, and they were sleeping on a floor with three or four other guys who were all working in Rochdale,” he says.

“I've watched them graduate from having nothing, to driving around in Range Rovers -  and the only explanation they can proffer is ‘my mate looks after me, he gives me money’. Well –no. You’re doing well because you're moving cigarettes around. I've seen it in the back of your car. I've seen the surveillance reports, and I've caught you this many times.

“I’m not saying slavery doesn’t exist in tobacco –and I think you're going to see more of it as people move up the chain and become wealthier –but I’d be lying if I said it was endemic.” Still, he admits seeing evidence of care leaver youths who have previously arrived in the UK as unaccompanied asylum-seeking children being groomed into the tobacco game.

“As soon as they turned 18, they were going working in these shops,” he says. “We’d go and see them at their accommodation and find stuff in their flats addressed to the shop that looked like they were being groomed. 

“There’d be a pair of Balenciaga trainers, or a brand new iPad or iPhone. And obviously this was part of the down payment for the organised guys getting these young lads into the business of tobacco. From a young age, they’re being recruited straight into it.”

On the organised crime threat of illicit tobacco, however, Mykytiuk shares common ground with his colleagues – and believes it needs to be taken more seriously.

At street level, trading standards tobacco offences can take months to prosecute and rarely carry the bite of a prison sentence. Most offenders – if they can be located by the time a case lands in court – receive a fine or community order. In the meantime, shops reopen with a new stooge tenant in situ. 

The National Crime Agency said that while it supports partner agencies on tobacco enforcement, its focus is on prohibited commodities like drugs and firearms, with HMRC taking the lead on tobacco. 

Mykytiuk, though, believes the multiple layers of crime behind cheap, illegal tobacco are escaping scrutiny, allowing crime gangs – emboldened by the lack of deterrent – to expand their power base right under the noses of enforcement. Having witnessed Kurdish tobacco gang members invest heavily in property and high street businesses here in the UK, he’s now seeing evidence of them moving into cannabis farms.

“But forget drugs,” he says. “Drugs is yesterday. The big thing is tobacco. These gangs are becoming the most capable criminals in this country. Right now it's the biggest threat we’ve ever faced.”